Thursday, June 21, 2012

Ask the experts: Financial Training 2012 - Financial Times

Welcome to the Financial Times Ask the Experts Financial Training 2012. With the ongoing financial crisis, financial training is still at the top of the agenda for many. Our panel of experts will be available to answer your questions on Wednesday, 20 June 2012, between 14.00 and 15.00 BST. Post your questions now to ask@ft.com and they will be answered on the day.

On the panel are:

Scott Rostan: founder of Training The Street. Scott began his professional career as an analyst with Merrill Lynch´s M&A group in New York. After gaining transactional experience in a broad range of industries and with a wide spectrum of clients, Scott decided to draw more directly on his teaching gifts.

Pablo Triana: professor at Esade Business School. Pablo has held several roles in the financial industry and is a graduate of NYU Stern and American University.

I have a Masters in Statistics and an MBA in banking and finance and I would like to do a financial course. My friends have advised me to do a CFA (chartered financial analyst) and FRM (financial risk management), someone also told me to do ACCA or ACA. Can you please advise me?

Pablo: CFA or FRM are important qualifications with global recognition, but they are not full-fledged academic programmes. Depending on one´s career status and goals, CFA/FRM can be a better option than a masters degree from a university or a business school, but you won´t gain many of the benefits of earning and experiencing a masters degree.

What many people do is earn a Masters in Finance and then, once they are back in the workplace, prepare for the CFA or FRM. Some masters degrees actually help you get ready for these exams.

Della: Why do you want to do a finance course? What kind of job do you want to have when you have finished? Clearly a financial analyst course would help you get a job in that sector, an accountancy qualification would help you become an accountant. I would suggest that you get a little more work experience before deciding what kind of career you want and then invest in more training.

Scott: Depends on your goals from the financial course. CFA skills are often most applicable to those interested in asset management, investment management and/or research. Risk management is a growing area in finance as companies think about how to best manage various risks. Accounting obviously gives a different set of important skills. Based on my experience with MBAs, they usually possess a solid foundation in accounting for finance with a focus on “financial statement analysis.”

With your Masters in Statistics and MBA, you possess great analytical skills. Ask yourself what you would like to accomplish from the additional courses (new job, additional skills in current job, career switch) and then research the time, cost and format.

Hello there, I was just wondering where the best online MBA programme is offered? By best I mean a programme that is internationally accredited and recognised by reputable universities.

Saeed Sheshehgar

Della: The Financial Times publishes an annual listing - NOT a ranking - of online MBAs here.

Scott: This is a relatively new and emerging approach for MBAs. With the advances in technology, distance learning options are exploding. (The one I know best is where I am an adjunct professor of finance: the University of North Carolina Kenan-Flagler Business School, which has launched a successful online programme called MBA@UNC).

In terms of the “best,” it depends on your fit and programme offerings. A few questions to ask yourself: Why are you interested in an MBA? What are your plans post-graduation? How will the MBA help your achieve those goals? What attracts you to the online format vs. a live programme?

In terms of recognition, I believe most employers will still focus on the school’s overall name and reputation vs the individual online programme’s reputation.

I recently graduated from Loughborough Business School with a 2.1 BSc in finance and am looking for a role in the front office, with a view in the long-term to work on a macro trading desk. How beneficial would a masters or MBA be to finding such a role, or would working from the ground up be a better way to go?

Della: An MBA is generally a post-experience degree, essentially for those who want to move from a functional role to a managerial role, while a Masters in Finance is usually (but not always) a pre-experience degree which digs deep into financial calculations, methodologies and business context.

The latter would clearly be appropriate for you at this stage in your career, but so too would a myriad of other financial programmes and certificates - I won’t list them all as I can’t cope with all the acronyms. Some work experience would certainly help you decide what kind of career would be available to you and what you would enjoy.

Pablo: An MBA or MiF can help you get a front office job certainly. Of course, it is not a requirement but it can help a lot. Actual experience can obviously be a better route to a top job but an academic programme can provide a wider view of the entire financial industry and may help you switch between functions and firms.

Scott: If your long term goals are a macro trading desk, ground up is probably the better way to go. Broadly speaking, the trading side of finance mostly values people with market experience.

For example: I know of a large, global investment bank where 10 per cent of the summer MBA interns but about 33 per cent of the summer analyst class are going into capital markets; their philosophy, as with most banks, for trading side is to hire mostly analysts – usually the vast majority of hiring into trading - and then develop and promote the talent from within that group.

While a master or MBA can help with learning new skills, it doesn’t replace the pulse of the market and hands-on market experience.

Are there any insights you can give for mature age students entering the finance industry? I am 41 years old and am undergoing a career change after a career as a concert pianist. I hold a doctorate of music, I have just finished my first year of a BSc with the University of London International Programme (lead college LSE) and will sit the CFA Level 1 exam this year. I would love to work for a major investment bank. Do the benefits of my ‘maturity’ outweigh a possible ‘negative’ in my age, or vice versa?

Mark

Della: I think your previous career and your academic credentials, as well as your maturity, should make you a fascinating recruit for an investment bank. I just hope they have the sense to employ you.

Scott: Very interesting career switch! I think your “maturity” can be viewed as a positive and a negative, depending on the role you are looking for in a major investment bank.

For example, if you are looking to work in the M&A/advisory and industry coverage areas, the junior level professionals tend to be younger (just out of college or business school) and work very long hours (typically 80-100+ per week); as we get older (I am in your “maturity” level, shall we say), those time commitments are difficult, not only physically but also on a family dynamic.

But if you are interested in more financial consultant or asset management side of a bank, the entry point at an older age could be easier and these areas may be interested in people with a more varied set of life skills and experiences.

Small word of advice: you will need to be honest with yourself about probably being trained by and working for someone who is younger! Finance, as you know, is loaded with talented people in their 20s and 30s. This could make for an interesting work dynamic, but given your seriousness in course work and with the CFA Level 1, you seem to possess (ahem…) the maturity to make it work.

Thanks for keeping this invaluable and helpful section on your online portal of business education.

I seek your guidance in admission as I am in confusion state. I want global exposure and am seeking a long term career in marketing. At present, I am in India, working as a software engineer. What are the placement prospects abroad as I have a few friends returning back from the US after higher education ending up jobless.

Should I go for a CAT (India) or GMAT? An MBA in India or abroad? Is there any difference between a full-time and part-time MBA? Why choose an MBA? And can you share with me data of US, Australia and Canada related to b-schools with good employment rates?

Tarun Kakkar

Della: There are so many questions here it is hard to know where to begin to answer them. As a starting point, it is worth asking yourself which country you want to live and work in. If the answer is India, then the CAT and an Indian business school would be appropriate - either a PGP programme or a post-experience MBA.

If you want to work overseas, some countries are more welcoming to graduates from overseas and you rightly highlight Australia and Canada as two such countries. In both our MBA and Masters in Management (PGP) rankings we publish employment data.

Scott: That’s a loaded question with many, many parts. Let me try to help end your state of confusion. Overall advice: Be realistic with your goals. If you are interested in marketing, then I would try to attend the best marketing institution available to you. But bear in mind the institution you choose will open up some possibilities and close others.

Each decision opens and closes doors at the same time – just keep on progressing through. Job placement rates are obtainable for each school. My recommendation here is to also ask about the “internship” placement rates (typically summer jobs in between first and second year) and how many students got an internship in their stated area of preference as more and more companies are using the internship as the “summer interview” for full time positions.

As for India vs abroad – depends on the reputation, programme offerings and your goals post-school. If you are interested in marketing, I would try to get into the highest ranked marketing programme in a reputable school you can, no matter where it is.

Full-time vs part-time – depends on your career goals. If you are looking for a full career switch (sounds like it with engineer to marketing), the full-time programmes offer a good opportunity to immerse yourself fully in the school work, network and try something new with an internship. The part-time programme may make more financial sense in the near term (keeping your salary is nice), but it may be tough to make the career switch if you are fully employed (no internship opportunity, harder to interview, tougher “why make the switch from engineering to marketing” question, etc.)

And why pursue an MBA – that’s the key question to ask yourself. What skills do you want to learn? What are your career goals? How will an MBA help you? Is it worth it? Are there other avenues in your current career path that can expand your skill sets?

Finally, I recommend you have some personal reflection here. Speak to friends with MBAs and friends in the business world who work with MBAs about your situation. Just be open and honest with them and yourself.

What are your recommendations for a financial markets programme for somebody with a law background? Is there a Masters in Finance degree (preferably online, since I am working full-time) which would provide a good understanding of the way the financial markets function?

Raluca

Della: Off the top of my head, I can’t think of any joint programmes Raluca, but there are an increasing number of law schools and business schools working together because the two sectors are so closely aligned. This is particularly true in Europe, the US and Canada.

Pablo: Law plus finance is a good combination. Some schools offer degrees covering both areas.

Scott: I have known a good number of lawyers making the switch to investment banking over the years. They often bring expertise with contracts, negotiations and tax & structuring. Therefore, M&A and industry coverage are natural fits for a lawyer.

The area I see as weakest for lawyers is threefold: (1) financial statement analysis, (2) corporate valuation and (3) financial modeling. While a finance degree or MBA will help address those areas, there are many ways to learn these skills.

My company, Training The Street, and many of our competitors offer workshops in various formats (weekdays, weekends, evenings, online, live) and self-studies in these areas. Many of the investment banks use these as pre-work for lateral hires (loosely throwing the lawyer turned banker into this category) or a crash course training programme for those that the entry level programme (typically for new analysts and new associates) does not make sense.

Please would you answer the following questions:

1. Coming from a technical IT background in terms of education and work experience (recently on the IT side of a risk function), what is the best route (e.g. training, certification CFA, CRM, working in junior business roles, etc.) to increasing the opportunities of working on the business side of the fence?

2. Our son is hopefully doing well at his GCSE exams, having just sat them, and prefers the rigours of essay writing, particularly the structured essays in history where an argument has to be presented with evidence. He also enjoys the pure mathematics subject and he is sitting further mathematics. His research so far has led him to look at reading economics with mathematics or economics at university. His A-level subject choices are therefore: mathematics, further mathematics, history and economics. Is this approach valid for a career in the City of London (investment banks, brokers, consultancies), preferably in the business departments, not IT?

Fayaz

Della: (1) I would have said an MBA - full-time, part-time or by distance learning - would be your best bet, as you already have lots of technical skills. (2) Sounds perfect!

Scott: (1) Making the switch from IT to the business side can be tricky. Ask yourself why you want to pursue this and what makes you attractive to the employer? All of the options you mentioned will help. Some people also try the MBA “career switch” route, but this is the most expensive and potentially disruptive in terms of salary loss, family dynamics, etc.

The CFA is a good option if you are interested in the asset management/research side of finance. My one bit of advice here: Fully leverage your IT skill set!!! For example, knowing HOW the science works in an area gives a tremendous advantage to writing in depth research on IT trends or a technology company’s new products. It is much easier to learn accounting and finance than it is to learn the “science of IT.” But analytical skills are only one part of the equation: communication, interpersonal and teamwork skills are also critical for a client interfacing, “business side” role.

(2) Absolutely! I was personally an economics major (with some maths emphasis) myself. Most bank’s analyst classes are comprised of “business/finance/accounting” and “liberal arts/sciences” majors. For large companies, it is not unusual to have one-third to one-half of the class made up of non-business/finance/accounting. Companies are looking to hire talent - analytical skills, good attitude, work ethic vs actual expertise in a subject area. The accounting, valuation and financial modeling skills can be developed through practical training and transaction experiences.

Most of the pre-experience masters ranked in the FT 2012 ranking are located in Europe whereas the financial industry grows mainly in Asia. How can a European student learn more about Asia? How can you catch job opportunities in EMEA?

Clement Tubery, Master in International Finance student, HEC Paris

Della: That’s a great question Clement. If you are studying at a business school, especially a top-rated one such as HEC, you will obviously have the help of the careers office in doing this. But you are absolutely right in pointing out that it is Europe, rather than the US or Asia, where these finance degrees are popular.

So, what kind of qualifications do financial professionals in Asia hold? I suspect that the predominant qualification in Asian countries are certificate programmes such as the CFA or the various accountancy degrees, which are portable across country boundaries. I also think that speaking Mandarin might go a long way to help in China!

Pablo: It is true that most finance programmes are based in Europe (and the US). This is probably mostly due to the existence of mature markets and established business schools. With Asia flourishing we should see leading programmes emerging from there, especially given the promise of enticing job opportunities in the region. It’s important to point out that Asian students make up a large proportion of finance students at European and American schools.

Scott: Currently, the three main hiring hubs for financial services are Hong Kong, London and New York. While there are plenty of others, most companies feed through those three.

Asia has been and probably will be in the near future the growth for the financial service sector. Keep reading the financial press about Asian markets. Explore school exchange programmes in Asia to spend a year or semester abroad. Pursue an internship in Asia (probably trickier for a non-Asian, but not impossible).

Also, starting in London or New York will give a solid experience and then maybe a job transfer in the future to Asia could occur. And catching job opportunities in EMEA is the same as everywhere else: have a strong resume, interview well and perform well during an internship. Most banks use the internship as the primary feeder into their full-time hiring class.

I graduated with a degree in accounting and finance and I am a CFA Level I candidate. I am having difficulty getting a job in the finance industry in Malaysia for two reasons. First, its limited job openings which usually require you to have years of experience, even if it is just an entry level finance job. Second, its focus on Islamic finance, which I have never studied in an overseas university. I tried to apply to finance jobs in Singapore, Hong Kong and China but I never got any replies. I think the reason for this is due to the permanent residency requirement, which I do not have.

I also tried to apply for a Master in Financial Engineering or Master in Finance, which largely based its curriculum in quantitative subjects. They told me that they aim for engineering students or students with a background in mathematics and physics. I have difficulty in securing any masters degree due to my bachelor degree not meeting the admission requirement. I want to enrol onto a masters degree for two reasons: Its network opportunity and its more quantitative curriculum.

So, my question is, can you please give me some advice regarding how to break into finance industry in Asia and how to secure a place on a masters programme based on my profile?

Peter Low

Della: I am sorry to hear you are having such difficulties, Peter. I certainly think a CFA qualification will help. While Masters in Financial Engineering degrees are for the highly technical and numerate, Masters in Finance programmes cover a range of skills and topics and are open to participants from less technical backgrounds. Look out for degrees in finance and economics for example, or business and finance. A programme like this would be most effective in augmenting your current qualifications.

Pablo: Many finance programmes are not quantitative-theoretical and do not demand a scientific background at all. While finance education has been “quantified” (excessively, in my opinion), there are still many schools that recognise that finance is a business, not a science and should be treated as such in academic quarters. Some of the world´s top finance programmes are NOT quantitative and are open to any type of student.

Scott: Everyone’s situation is different and unique. I am better suited to help you with the finance industry question: network, network and network some more! If you don’t know people in the sector, get out there and show initiative and try to meet some more. Network through the CFA, friends, acquaintances and alumni from your school. You never know when talking to someone at the right time about the right situation will turn into a job lead.

Finance jobs in Asia right now are tough to come by – the companies are hiring, but the rate has slowed. Broadly speaking, job hiring in finance follows anticipated capital markets activity – more deals, more people. It is a cyclical business and the cycle is down right now. And you need to get some experience somehow.

Internships could be a good way to go, even if unpaid. Companies often like to hire a known quantity (someone they have met and know through an internship) vs someone new. Just getting your foot in the door is key and may turn into something.

I am less qualified to help with the masters question, but keep trying. Maybe take a course in the evenings or weekends to round out your skill set. That could help with the admissions requirement. And, if this is the serious end goal, maybe you should explore going back to the bachelors programmes first in those areas.

Access to superior education helps developing countries (ie. Paraguay, where I live) benefit from developed countries’ expertise and knowledge and deepen its capital markets, making it more attractive to foreign capital and at the same time ensuring the adoption of sound principles in their local financial markets. But, the offer of such masters programmes and, more importantly, financial aid offers are very limited. Why do you think universities haven’t made decisions on this matter?

Scott: I think the scarcity is caused by the demand side – positions for the programmes and financial aid dollars are very, very competitive. It is a global world and the schools know it. Schools will often highlight their percentage of international students to demonstrate this. Money is tight though: university and government budgets are under pressure, so there is a limited amount of financial aid available.

Universities are setting up campuses in other areas of the world and expanding exchange programmes to attract a more global audience. Online programmes could be another option for you as you can tap into the expertise you want, but stay local in Paraguay.

Dear financial experts, I am a finance professional and very well versed with the ongoing financial crisis that started in 2007. I have noted the whole hearted approach scholars, professionals and practitioners have taken to finding a lasting solution, however, what they have achieved is to get a short term reprieve from the absolute impact of this crisis.

Currently, the European economy is not doing fine, neither are other economies, I therefore conclude even emerging countries economies are not growing at the expected growth rate had USA, Europe, etc been doing fine.

My challenge therefore goes to you the expert team - isn’t it now clear that the global financial crisis is well beyond the dependability of finance expert’s credential and skills in numerical ability or there investment acumen? Would then be a need of change in tact, strategy, and resources in tackling this growing monster be an ideal approach rather than sticking to same computer simulated scenario strategy.

Scott: That’s a deep and tricky question that I don’t have the answer to. And I personally don’t feel anyone has the answer to the best solution. However, as a guest expert here, I’ll give you my thoughts:

The causes of the global financial crisis are many-fold with numerous parties involved. And getting to a better solution will also take the contributions of many parties - with differing interests!

The computer simulated scenario strategies played a part, but it wasn’t the sole cause of the crisis. If you step back and use common sense like “if it seems too good to be true, then it probably is,” things should be better. Using computer models to forecast things is a new fact of life. Key thing – and I teach this in class all the time - the models and forecasts are only as good as the assumptions you put into it. “Garbage in, garbage out” is my favorite saying here. Is it realistic to assume your home in the USA will approximately double in value over 5-10 years? Probably not, but it did in the early to mid-2000s for many home owners, enough to cause some (not all) to think this will continue. So what assumption should we use for future property appreciation? How much is my home equity worth now? In 5 years? In 25 years?

So yes, I agree with you, the world needs a change in ‘tact, strategy and resources’. But the million (or should I say trillion) dollar question is what is that change? The world needs creative thinkers like yourself, so keep thinking about how you and everyone else can help make this a better world!